Chemical plants are flocking to La.
11th June 2012 · 0 Comments
By Susan Buchanan
With a hundred chemical plants and seventeen oil refineries, Louisiana wrestles with pollution, and that’s aside from any havoc wreaked by the BP oil spill. As a result, Louisianans have had rocky relations with petrochemicals, needing the industry’s jobs but fearing explosions and toxic emissions. For its part, the state has attracted some cleaner industries recently, including software, digital media and marine companies. But with natural gas prices at 10-year lows, chemical and other manufacturers are opening new plants here and expanding old ones.
“The number of plants coming our way, either for sure or probably based on feasibility studies, is pretty darn substantial,” said Loren Scott, emeritus economics professor at Louisiana State University, last week. “We’re getting a bigger slice of the chemical pie because natural gas is cheap here while it’s still expensive in Europe.” Natural gas was valued at around $2.30 per million BTU on the New York Mercantile Exchange last week, down from nearly $16.00 in 2005.
Don Briggs, president of the Louisiana Oil and Gas Association, said a leap in technology to extract gas from the Haynesville shale deposit—in northwestern Louisiana, eastern Texas and southwestern Arkansas—has been the industry’s version of astronauts landing on the moon for the first time. Wells are drilled down to reach shale formations, and then the drill bit is turned and the well is extended laterally into rock. After that, hydraulic fracturing or fracking occurs. Water, sand and chemicals are pumped into the well to break the rock apart and release gas.
With a nonstop supply of gas from fracking, manufacturers are hurrying to build chemical plants here. They’ll use the gas for fuel and as building blocks for their products, and they’re lured by the region’s extensive gas pipelines and the Mississippi River’s infrastructure. Louisiana Economic Development is icing the cake with property and payroll tax credits and other incentives to companies building plants.
Scott mentioned some of the many plants interested in locating here. South Africa-based Sasol is considering a $4.5 billion ethylene complex in southwestern Louisiana that would come on stream in four years. Royal Dutch Shell is considering a giant plant, converting natural gas into diesel fuel, for Louisiana. Methanex in Canada might build a methanol plant in Geismar in Ascension Parish. Last year, SNF Flopam opened a specialty chemicals plant in Iberville Parish that could provide more than 500 jobs by 2015. Plants are also in the works for Jefferson, St. Tammany and the River Parishes near New Orleans. Average pay at most of these facilities is projected at $57,000 or $58,000 a year, plus benefits.
Other types of manufacturers have been lured here by cheap natural gas. In St. James Parish, Nucor is building a pig iron plant, with plans for a much bigger steel complex there. But in April, Zen-Noh Grain Corp., which owns a nearby export terminal, filed suits in federal and state court claiming the steel plant would emit huge amounts of carcinogens.
Scott said Louisiana plants have an advantage over European producers in making ethylene, a chemical used in plastics. “Europe has lots of shale but France and Bulgaria have outlawed fracking, and several other European nations oppose it,” he said. European manufacturers make ethylene from crude oil, which is more expensive than natural gas. It costs almost twice as much to churn out ethylene from crude in Europe now as it does to make it from Louisiana’s natural gas.
Briggs said “Haynesville is the largest shale deposit in the country, and we’ve known about it for a long time.” The rush to buy and drill land in the Shreveport-Bossier City area accelerated in 2006. “We’ve always had natural gas but now we have abundant, long term supplies,” Briggs said. “Overnight we created a supply that’s so immense we no longer need to import gas and are preparing to export it. Business can count on ample supplies.”
Natural gas producers aren’t happy about the recent drop in prices, however, and some operators have reduced output. Briggs said “next year, gas might be up at $5.00 again,” but he doubts prices will return to their 2005 levels anytime soon.
But Scott warned that European nations may eventually soften their opposition to fracking, maybe out of necessity. In that case, prices there would drop.
Meanwhile, Louisiana residents worry about accidents. On March 22, Westlake’s PVC chemical plant in Geismar, 25 miles south of Baton Rouge, exploded and released vinyl chloride, chlorine and hydrochloric acid into the air. Roads and a long stretch of the Mississippi River were closed for awhile. A lawsuit on behalf of neighbors was filed against the company.
The nonprofit Louisiana Bucket Brigade and the Washington, DC- based Environmental Integrity Project coauthored letters last Dec. 14 and again on May 17 of this year, asking EPA to revoke the DEQ’s authority to manage the Clean Air Act program—because of frequent, petrochemical plant accidents. “Each of these accidents releases enormous amounts of hazardous pollution that pose risks to the health and safety of the communities we advocate for,” the May 17 letter said. The groups faulted DEQ for air monitoring teams reaching accidents too late; not sharing information about accident monitoring on a timely basis; providing data that isn’t transparent or comprehensible; and not surveying people for chemical exposure.
According to the May 17 letter, “when Louisiana does take enforcement actions, the penalties are little more than a slap on the wrist. In 2010, the average penalty for a Clean Air Act violation in Louisiana was $1,329.86, the second lowest in the nation.” In Texas, the average penalty for a violation in 2010 was much greater at $26,619.92.
When asked about those letters last week, EPA spokesman David Bary in Dallas said his agency’s position is that “the EPA has delegated authority to the DEQ to administer and enforce the federal Clean Air Act. Through annual EPA audit and review processes, the EPA remains confident that DEQ will continue to ensure the protection of public health and the environment throughout Louisiana.” In other words, EPA will continue to work with DEQ.
In the last two decades, DEQ has gotten tougher on chemical companies. In the early 1990s, “Sixty Minutes,” “The Oprah Winfrey Show” and other TV network programs drew attention to health threats from Louisiana chemical plants. In 1995, the DEQ demanded that chemical producers improve safety procedures and accident responses and inform the public about incidents. In 2004, DEQ installed additional air monitoring equipment at 15 chemical plants and refineries in the Baton Rouge area.
As a government agency, DEQ has to accept the cards it’s been dealt. Decisions about making errant plants pay bigger fines, Texas style, lie with Governor Jindal’s office and the Louisiana legislature.
DEQ spokesman Rodney Mallett said last week “DEQ responds to more than 10,000 calls from citizens and industry a year. Each one is investigated.”
He said “the Bucket Brigade considers all calls to be accidents, though most of the calls we receive are minor events that are far below reportable quantity.” Federal and state programs rely in part on self-reporting by industry. “The possibility of civil enforcement action or criminal actions by the state or federal regulators serves as motivation for industry to report accurately,” he said.
Mallett added “most of industry wants to comply with environmental regulations. They live and work in the same areas.”
He explained how DEQ responds to an incident, and said “like fire and police departments—our air monitoring teams can’t predict accidents.” DEQ has a dispatching system that uses emergency responders and technicians from one of its eight regional offices that’s closest to the incident. “As soon as DEQ arrives, we conduct air or water monitoring and consult with the overseeing, emergency-response agency to provide information based on sound science,” he said.
He continued, saying “many times, the responders who receive the 9-1-1 call, such as the state police or local fire departments, also conduct air monitoring, as does the facility itself. As an event unfolds, local parish and city emergency responders make decisions about how to protect people with evacuations or shelters-in-place. “
State and local agencies depend on DEQ’s equipment and technical personnel to protect residents and the environment, Mallett said. And he said all of DEQ’s information is available online or by request at deq.louisiana.gov. A public records staff assists with inquiries.
The Louisiana Bucket Brigade and other environmental groups want state government to do more, however. “If people believe the DEQ statements that these accidents pose no danger to the public, then they make decisions—like buying a house next to a refinery or sending their kids to school near a chemical plant—due to a false sense of safety,” LABB said in its May 17 letter to EPA.
To help people make decisions about moving and vacations, the EPA has a tool called AirCompare. St Bernard Parish—home to Chalmette Refining, a Valero refinery and a Domino Sugar plant—topped the Gulf’s worst air list in 2011 with 77 unhealthy air days for those with asthma or lung disease. Next was Harris County, Texas with 32 bad air days. Another five counties in Texas had 20 or more bad days last year. Texas, of course, is home to many refineries and petrochemical plants.
In Louisiana, Bossier Parish had 17 lung-threatening air days last year. East Baton Rouge had seven, St. Tammany had five and St. John the Baptist had four. West Baton Rouge and St. James had three, while Orleans and Jefferson Parishes had two each. A choking air day on the Gulf can make you wish it were only a bad hair day.
Meanwhile, many chemical companies have decided they’d rather be safe than sorry. Edward Flynn, vice president for health and safety at the Louisiana Chemical Association, said “today there’s more emphasis on process safety, in addition to the existing emphasis on worker safety.” The current approach is more proactive and preventive than it was. “Plants want to have good systems and procedures in place to make sure everything is running properly,” he said. “They’re now looking at leading indicators for safety, not just lagging indicators—like how an accident happen.”
Since 2006, U.S. natural gas production has grown by more than 25 percent mainly because of horizontal drilling combined with fracking. Don Briggs said that process is safe but communities worry about aquifer contamination and the possibility of earthquakes.
For more on what your community can do to protect itself from chemical plants and fracking, take a look at LABB’s Web site at labucketbrigade.org and the Louisiana Environmental Action Network’s site at leanweb.org.
This article was originally published in the June 11, 2012 print edition of The Louisiana Weekly newspaper